The fact that more and more banks in the West are reporting losses tells us that the sector is stressed and will demand cash infusions. In a phase when the cost of funds (interest rates) is rising, it means the US Fed will focus on bailing out the big fish, whereas the small mom-and-pop businesses may struggle for liquidity. With rampant printing of unbacked currency during covid lockdowns triggering multi-decade high inflation, printing more cash is not a good option. Big money smells that dilemma and is deleveraging (cutting down on risky bets). This episode discusses the same in detail.
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